Mukunda: I was surprised by how unambiguous the data were, but they confirmed what I suspected: If you choose an insider who you know can do the job well, most of the time that person won’t perform any differently from any other top candidate with lots of experience. Such insiders—I call them “filtered leaders”—might be good, but they probably won’t be brilliant. It’s the unfiltered leaders, the outsiders without lots of experience, who perform the very best.
HBR: So should firms always hire outsiders without experience?
Mukunda: No, because those people are also more likely to crash and burn. Though the best leaders—Steve Jobs, Abraham Lincoln—were unfiltered, the things that made them so effective, such as their ability to think differently and not feel beholden to a certain way of doing things, often lead to terrible results. Unfiltered leaders are high risk, high reward. Filtered leaders—like Tim Cook and Neville Chamberlain—have deep knowledge and can be very effective in a stable situation. But they often can’t adapt to extreme, sudden change or are unable to disrupt the status quo, which an outsider feels freer to do.